Value-Add Multifamily Fetches $44M

MORENO VALLEY, CA—Los Angeles-based investor MJW Properties has purchased the Broadstone Overlook from an unnamed institutional multifamily owner for $44 million. The value-add sale attracted 160 interested investors, and resulted in dozens of tours. According to the seller's sales team at Berkadia, this transaction illustrates the high demand for value-add multifamily in suburban markets.

“Original ownership had invested in the property with a 7-year horizon; at the 7th year they decided to wait another year as operations were steadily improving and new residents were paying the increased rate for interior improvements, including new hardwood floors,” Dean Zander, managing director at Berkadia, tells GlobeSt.com. “During this time they also upgraded the common areas including refreshing the leasing office, clubhouse, business center, fitness center and pool/spa areas.” Zander represented the seller in the transaction along with his colleagues Vince Norris and Margie Molloy.

Located at 12963 Moreno Beach Drive within Rancho Belago submarket of Moreno Valley, the 256-unit class-A property sits on 16 acres and features a community lounge, pool. Spa, fitness center and business center. It has a mix of one-, two- and three-bedroom apartment homes in 15 building. Recently, the seller began making significant interior renovations, adding hardwood floors and stainless steel appliances. The buyer plans to continue making the renovations to the interior units.

The marketing process was incredibly competitive. The asset was already consider class A, and has experienced escalating rents because of the ongoing interior improvements. Although 160 investors inquired about the sale, some thought that rental rates were reaching a peak. “Quite a few of the prospective investors felt the rents were trending towards the high end of the market and had more perceived risk than upside,” adds Zander. “However, the strongest collection of prospects actually realized the compelling new job formation situation in Moreno Valley was creating an entire new class of renters who wanted and could afford all the finest amenities both in the common areas and in the unit interiors.  We had interested investors from all over Southern and Northern CA, plus the Pacific Northwest and even Chicago, come tour the asset and submit offers. The successful bidder has a very long-term ownership perspective and understands the job formation, rent growth and demographics trends are clearly in the owner's favor.” In the end, the asset drew several competitive offers.

Alliance Residential built this property in 2007. In December of last year, a similar Alliance-built property traded hands. An institutional buyer bought Lasselle Place for $45 million in a sale led by Zander.